All permanents on the battlefield (Moritte of the Frost as a copy of River Kelpie).
Steps
Activate Altar of Dementia by sacrificing Moritte of the Frost.
When Moritte of the Frost dies, its persist ability triggers, returning it from your graveyard to the battlefield as a copy of River Kelpie with two additional +1/+1 counters on it and a -1/-1 counter on it.
Remove one +1/+1 counter and one -1/-1 counter from Moritte of the Frost as a state-based action.
When Moritte of the Frost enters the battlefield, it and River Kelpie's first ability triggers, causing you to draw two cards.
Resolve the Altar of Dementia ability from step 1, milling target player a number of cards equal to Moritte of the Frost's power at the time of activation.